YOUTH DEMONSTRATION
April 28, 2005

Thu Apr 28, 2005

By Brad Dorfman

EAST HANOVER, N.J., April 28 (Reuters) - Shareholders of Altria Group Inc., the maker of Marlboro cigarettes, on Thursday criticized the company's expansion into various countries in Africa and Asia, saying the moves will worsen smoking in those markets.

But Louis Camilleri, chairman and chief executive of Altria, the world's largest tobacco company, said the expansion should be welcomed, stressing to the annual shareholders meeting the company's record in supporting smoking regulation.

People from Nigeria, Indonesia, India and elsewhere spoke out at the meeting against the expansions by Altria, which owns the Philip Morris tobacco companies and controlling owner of Kraft Foods Inc..

Camilleri countered that Altria has supported smoking regulation and spends money to discourage youth smoking.

"Rather than being upset that we are entering Indonesia, you should be delighted," Camilleri said. The company in March acquired a 40 percent stake in Sampoerna, the third largest maker of the clove and tobacco cigarettes called kreteks in Indonesia.

Altria is looking for more markets to sell cigarettes to counter a weakening of the U.S. market, which has been hammered by health concerns, litigation and legislation aimed at discouraging smoking.

The Wall Street Journal reported last week that Altria was close to signing a deal with the Chinese government that would allow Marlboro cigarettes to be manufactured and sold in China, one of the world's largest cigarette markets.

The shareholders meeting at a Kraft research center in East Hanover, New Jersey, brought out dozens of protesters, many of whom carried black balloons outside the meeting and wished Marlboro a "Happy 50th Death Day" to commemorate the brand's introduction as a men's cigarette.

During the meeting, about a dozen protesters, sporting head coverings of black cloths adorned with skulls, stood up while Camilleri detailed the charitable contributions Altria and its employees have made over the year.

Some at the meeting took issue with Camilleri's assertion that Altria works with governments to control youth smoking and support other controls.

"This company has the proven marketing muscle to expand the addiction risk and expand the consumption risk of tobacco," Kathryn Mulvey, executive director of corporate watchdog group Corporate Accountability International, said.

Shareholders soundly defeated four shareholder proposals to eliminate animal testing on tobacco products; look for ways to more adequately warn pregnant women about the dangers of smoking; end promoting "Light and "Ultra Light" brands, and extend the production of so-called fire-safe cigarettes nationwide. None of those proposals received support more than 4.9 percent of the shares voted on each.

In recent years, Philip Morris has conceded that cigarettes are not safe, which Camilleri repeated Thursday.

"There is no such thing as a safe cigarette," Camilleri said. "People should quit if they are looking for a safe alternative."

But, he said, "whether you like it or not, people enjoy smoking," while stressing that the company does not market to children.

Camilleri also repeated that Altria is making preparations for a possible break up to gain fuller market value for its businesses.

Any split-up, which could split Philip Morris USA, Philip Morris International and Kraft Foods, would be contingent on the company clearing several legal hurdles in the United States.

Altria shares were up 44 cents at $65.27 in afternoon trade on the New York Stock Exchange.